The basic economic principles that guided the evolution of advertising

also have social and legal effects. When they are violated, social issues
arise and the government may take corrective measures. Society
determines what is offensive, excessive, and irresponsible; government
bodies determine what is deceptive and unfair.
Advertising regulation refers to the laws and rules defining the ways in
which products can be advertised in a particular region. ules can define
a wide number of different aspects, such as placement, timing, and
content. !any communities have their own rules, particularly for outdoor
advertising. Sweden and "orway prohibit domestic advertising that
targets children. Some #uropean countries don$t allow sponsorship of
children$s programs, no advertisement can be aimed at children under the
age of twelve, and there can be no advertisements five minutes before or
after a children$s program is aired. %n the &nited 'ingdom advertising of
tobacco on television, billboards or at sporting events is banned.
Similarly alcohol advertisers in the &nited 'ingdom are not allowed to
discuss in a campaign the relative benefits of drinking, in most instances
therefore choosing to focus around the brand image and associative
benefits instead of those aligned with consumption.
In India
Advertising Standards Council of India (ASCI) is a self(regulatory
voluntary organi)ation of the advertising industry.
*ike other countries around the world, %ndia too has a self regulatory
organi)ation +S,- for advertising content . The Advertising Standards
/ouncil of %ndia, AS/% founded in 0123. The three main constituents of
advertising industry vi) advertisers, advertising agencies and media came
together to form this independent "4,. The aim of AS/% is to maintain
and enhance the public5s confidence in advertising. Their mandate is that
all advertising material must be truthful, legal and honest, decent and not
ob6ectify women, safe for consumers ( especially children and last but not
the least, fair to their competitors.
Self Regulation India
Almost all professional fields have self regulatory bodies governing their
activities. 7or the advertising fraternity, until 0123 there was none. 8ue
to this there was a lot of false, misleading and offensive advertising. This
led to consumers losing faith in advertising and hence resenting it. %t was
decided that if this continued it would not take time for statutory
regulations such as censorship to be imposed on advertising content.
%n 0123, AS/% to be imposed on advertisers and advertising agencies.
This would make fair, truthful and decent advertising almost impossible
which would in turn hinder the industry$s ability to compete and grow.
%n 0123, the AS/% adopted a /ode for Self(egulation in Advertising.
With the introduction of the code, the aim is to promote honest and
decent advertising and fair competition in the industry. %t will also ensure
the protection of consumer interests and the all concerned with the ad
industry ( advertisers, media, advertising agencies and others who help in
the creation or placement of advertisements.
As the fraternity starts accepting the code, it will result in fewer false
claims, fewer unfair advertisements and increased respect for advertisers.
Company & Brands %n their constant 9uest to attract consumers and
associate products with :cool; or luxurious and hedonistic lifestyles,
some advertisers have consistently pushed the boundaries of what is
ethically and socially acceptable. American advertising has always
embraced erotic suggestiveness while usually staying clear of full nudity
and explicit sexuality. /ampaigns that blur that distinction often arouse
controversy and even protest. 7or two decades, the most notorious
purveyor of sensual :cool; was /alvin 'lein<beginning in the late
01=>s with the :nothing comes between me and my /alvin$s; campaign
featuring ?rooke Shields and culminating in 0112$s :kiddie(porn;
controversy.
#specially since the target market is teens and young adults, the
advertising is viewed as transgressing the proper place of marketing.
/ritics claim it reverses the conventional purpose of ads, using the
clothing to sell the lifestyle rather than invoking the lifestyle to sell the
clothing. ?ut as with the /alvin 'lein ads, the impact of controversy on
brand(name recognition is sometimes worth the risk to the corporate
image
The Many Controversies aout Advertising
Advertising is one of the most visible activities of business. ?y inviting
people to try their products, companies risk public criticism and attack if
their advertising displeases or offends the audience or if their products
don$t measure up to the advertised promise. @roponents of advertising say
it$s therefore safer to buy advertised products because, when a company$s
name and reputation are on the line, it tries harder to fulfill its promises
+especially when it lists product benefits-.
Advertising is both applauded and critici)ed not only for its role in selling
products but also for its influence on the economy and on society. 7or
years, critics have denigrated advertising for a wide range of sins<some
real, some imagined.
,ther controversies focus on the societal effects of advertising. 7or
instance, does advertising make us more materialisticA 8oes it force us to
buy things we don$t needA 8oes it reach us subliminally in ways we can$t
controlA Bow does it affect the art and culture of our societyA 8oes
advertising debase our languageA 7rom these economic and social
controversies, new 9uestions arise regarding the responsibility for and
control of advertising. What is the proper role for participants in the
marketing processA Bow much latitude should marketers have in the
kinds of products they promote and how they advertise themA And what
about consumersA 8on$t they have some responsibility in the processA
7inally, what is the proper role of governmentA What laws should we
have to protect consumersA And what laws go too far and violate the
marketer$s freedom of speechA
These are important 9uestions, and there are no simple answers. ?ut
debate is healthy.
The underlying principle of free(market economics<that a society is best
served by empowering people to make their own decisions and act as free
agents, within a system characteri)ed by four fundamental assumptionsC
self-interest, many buyers and sellers, complete information, and
absence of externalities (social costs).
This fundamentally utilitarian framework, derived from the goal of
society to promote behaviors that foster the greatest good for the most
people, offers a system of economic activity<free enterprise<that has
accomplished that goal better than any other economic system in history.
This is why societies around the world are increasingly adopting free(
enterprise economics.
The !conomic Impact of Advertising
Advertising accounts for approximately D.E percent of the &.S. gross
domestic product +48@-. %n relation to the total &.S. economy, this
percentage is small, but it$s higher than in most countries. %t amounts to a
spending level of FGE=.H> for every person in the country<the highest
per capita spending in the world. As !arcel ?leustein( ?lanchet, the
father of modern 7rench advertising, pointed out, it$s no coincidence that
the level of advertising investment in a country is directly proportional to
its standard of living.
The economic effect of advertising is like the break shot in billiards or
pool. The moment a company begins to advertise, it sets off a chain
reaction of economic events. The extent of the chain reaction, although
hard to predict, is related to the force of the shot and the economic
environment in which it occurred.
!ffect on the "alue of #roducts
Why do most people prefer /oca(/ola to some other colaA Why do some
people prefer /alvin 'lein underwear to some other unadvertised brandA
Are the advertised products functionally betterA "ot necessarily. ?ut, in
the mind of the consumer, advertising has given these brands added
value.
Advertising also adds value to a brand by educating customers about new
uses for a product. 'leenex was originally advertised as a makeup
remover, later as a disposable handkerchief. ATIT first promoted the
telephone as a necessity and later as a convenience.
,ne advantage of the free(market system is that consumers can choose
the values they want in the products they buy. %f, for example, low price
is important, they can buy an inexpensive economy car. %f status and
luxury are important, they can buy a fancy sedan or racy sports car. !any
of our wants are emotional, social, or psychological rather than
functional. ,ne way we communicate who we are +or want to be- is
through the products we purchase and display. ?y associating the product
with some desirable image, advertising offers. people the opportunity to
satisfy those psychic or symbolic wants and needs.
%n terms of our economic framework, by adding value to products,
advertising contributes to self(interest<for both the consumer and the
advertiser. %t also contributes to the number of sellers. That increases
competition, which also serves the consumer$s self(interest.
!ffect on #rices
%f advertising adds value to products, it follows that advertising also adds
cost, rightA And if companies stopped all that expensive advertising,
products would cost less, rightA
$rong%
Some advertised products do cost more than unadvertised products, but
the opposite is also true. ?oth the 7ederal Trade /ommission and the
Supreme /ourt have ruled that, by encouraging competition, advertising
has the effect of keeping prices down. That again serves the consumer$s
self(interest. And that is why professionals such as attorneys and
physicians are now allowed to advertise. Sweeping statements about
advertising$s positive or negative effect on prices are likely to be too
simplistic.
!ffect on Competition
Some observers believe advertising actually restricts competition because
small companies or industry newcomers can$t compete with the immense
advertising budgets of large firms.
%t$s true that intense competition does tend to reduce the number of
businesses in an industry. Bowever, some of the firms eliminated by
competition may be those that served customers least effectively. %n other
cases, competition is reduced because of mergers and ac9uisitions +big
companies working in their own self(interest-.
Bigh costs may inhibit the entry of new competitors in industries that
spend heavily on advertising. %n some markets, the original brands
probably benefit greatly from this barrier. Bowever, the investments
needed for plants, machinery, and labor are of far greater significance.
These are typically the real barriers to entry, not advertising.